Upsized Sealed Air, re-tooled Wallace Theater deals price; Claire's, auto-parts bonds move up

By Paul Deckelman and Paul A. Harris

New York, June 12 - Sealed Air Corp. successfully priced an upsized split-rated offering of eight-year notes on Friday. The Elmwood Park, N.J.-based specialty packaging company's issue came to market too late for any kind of secondary trading.

And there was no aftermarket action seen in Wallace Theater Holdings, Inc.'s new $157 million offering of senior secured four-year notes. The Portland, Ore.-based movie theater operator priced those bonds as expected - but not before first tinkering with the deal to make the paper floating-rate notes, and package them into units along with equity warrants.

While the day's two new deals did not trade in secondary, other recent issues, such as Interpublic Group of Cos., Inc. and Connacher Oil & Gas Ltd., did , holding on to the impressive gains which they had notched earlier in the week.

Back among the established issues, Claire's Stores Inc.'s bonds firmed smartly after the Pembroke Pines, Fla.-based retailer released favorable quarterly numbers.

And there was upside in the bonds of such automotive supplier companies as ArvinMeritor Inc. and American Axle & Manufacturing Holdings Inc.

Bonds of General Motors Corp. - American Axle's biggest customer - were also several points higher.

The junk market was slower on Friday, but firm, a senior official on a high-yield syndicate desk said.

Wallace restructures and prices

Only one high-yield issue priced in the primary market.

Wallace Theater Holdings raised approximately $150 million of proceeds with an extensively restructured $157 million issue of six-month Libor plus 950 basis points four-year senior secured floating-rate notes (B3/B-) that priced at 95.531.

The notes are part of units, priced at $1,000 apiece, which also include warrants for common shares representing 10% of the company.

The notes, which priced on Friday, come with a 3% Libor floor. If six-month Libor stays below that floor, the yield to maturity is 14%.

Call protection was extended to 2.5 years from two years.

The yield, coupon and Libor floor came on top of the price talk. The issue price came cheap to the approximately 4 points original issue discount talk.

Jefferies & Co. ran the books for the Rule 144A/Regulation S for life issue.

In restructuring the deal, the company changed the coupon to a floating-rate structure from a fixed-rate structure, and added the warrants.

Proceeds will be used to repay outstanding debt under the Portland, Ore.-based movie exhibitor's existing credit facilities and for general corporate purposes.

Sell-siders watching the deal said it looked more like a mezzanine transaction than a conventional junk deal.

"The fact that they got it done is a positive," said one syndicate banker not in the deal.

$2 billion week

With Wallace added to the total, the week's issuance came to $2.06 billion of proceeds, in seven dollar-denominated, junk-rated tranches.

In terms of dollar-amount of issuance, the June 8 week is the lowest since the week beginning March 30, 2009, which saw slightly less than $1.64 billion in five tranches.

At Friday's close year-to-date issuance stood at $52.2 billion, according to Prospect News data.

That tops 2008 issuance, to the June 12 close, by more than 31%. Issuance for 2008 to the June 12 close was $36 billion.

Sealed Air brings crossover deal

In a crossover trade executed off the high-yield desk, Sealed Air priced an upsized split-rated $400 million issue of 7 7/8% eight-year senior notes (Baa3/BB+) at 97.837 to yield 8¼% on Friday.

The yield came on top of the 8¼% area yield talk. The issue price came within the approximately 2 points of discount talk.

Banc of America Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities, Morgan Stanley & Co. Inc. and RBS Securities Inc. were joint bookrunners for the deal, which was upsized from $250 million.

Proceeds will be used for general corporate purposes, which may include the repurchase, redemption or retirement of the Elmwood Park, N.J.-based company's 3% convertible securities due 2033.

A sell-sider watching the trade said it went very well, and appeared to be playing to huge demand.

Ardagh Glass to sell €300 million

Ardagh Glass Finance plc will roadshow a €300 million offering of seven-year first-priority senior secured notes during the week ahead.

Citigroup has the books for the offering that is being run off the high-yield desk in London.

Proceeds will be used to repay the Dublin-based glass container manufacturer's existing senior debt and for general corporate purposes.

The coming week's deals

Ardagh climbs aboard an active forward calendar that also contains $1.35 billion of dollar-denominated offerings.

CB Richard Ellis Services, Inc. will end its roadshow Monday for a $400 million offering of eight-year senior subordinated notes (Ba3/B+).

Banc of America Securities LLC, Credit Suisse and J.P. Morgan Securities Inc. are joint bookrunners for the debt refinancing deal.

Elsewhere Terremark Worldwide, Inc. plans to price a $400 million issue of eight-year senior secured first-lien notes (B2/B-) during the week ahead.

Credit Suisse, Jefferies & Co. and RBC Capital Markets are the joint bookrunners for the debt refinancing and general corporate purposes deal.

And Wendy's International Holdings, LLC is on the high-yield road with its $550 million offering of seven-year senior unsecured notes, via Credit Suisse, Citigroup and Banc of America Securities.

A midweek pricing is expected.

Among the specified uses of proceeds is a possible dividend payment to stockholders, making it the first deal to include that possible use of proceeds in over a year.

Aside from the deals on the road, sources expect other offerings to surface, including drive-bys.

"There is a lot of reverse inquiry going on," said a senior high-yield syndicate official, who took a phone call on Friday afternoon.

"That's because the accounts have so much money it's crazy."

Earlier in the week a banker reckoned that based on the ongoing stream of coupon payments, in addition to inflows to high-yield mutual funds that report to AMG Data Services on a weekly basis and on a monthly basis, the buy-side's cash has lately been pouring in to the tune of $2 billion per week.

In the wake of hearing that color, other sources have told Prospect News that $2 billion per week sounds correct.

The syndicate official who spoke Friday afternoon has visibility on an energy deal set to come to market during the June 15 week.

Recent deals mostly higher

Traders said the new Sealed Air notes and the new Wallace Theater units saw no secondary dealings due to the lateness of their respective pricings.

But there was ample activity in other recently priced issues.

A trader saw Connacher Oil & Gas's 11¾% notes due 2014 having moved up to 96 7/8 bid, 97 3/8 offered. That was up from 95¼ bid, 96¼ offered, the level to which those bonds had risen on the break after their pricing Thursday, and it was up further still from 93.678, where the Calgary, Alta.-based independent oil and gas exploration and production operator had priced that $200 million offering of bonds to yield 13½%.

A trader at another shop meantime said that "there's a lot of interest" in recently priced paper pretty much across the board. "They've done pretty well this week."

For instance, he saw "still big demand" for Interpublic's 10% notes due 2017, which were trading as high as 101 5/8 bid, 102 offered on Friday. That was somewhat firmer than the par levels at which those bonds were seen going home on Thursday, and considerably better than the 97.958 price at which the New York-based advertising and marketing company had priced that $600 million of paper - the week's biggest deal - on Wednesday, to yield 10 3/8%.

One somewhat recent offering which he said "keeps heading up" is Sealy Mattress Co.'s 10 7/8% senior secured notes due 2016. Trinity, N.C.-based bedding maker Sealy priced that $350 million issue back on May 15 at 95.976 to yield 11¾% - but since then, the bonds have climbed steadily; on Friday, he said, they were bid at 1051/4.

"Sometimes, bonds get lost [after pricing] - but these keep moving up and up."

Western Refining rejection continues

But not every issue can be a winner, and the trader said that "the one that continues to lag is the WNRs - they can't get out of their own way right now."

Western Refining Inc., an El Paso, Tex.-based petroleum refining company, priced its $600 million deal in two parts on June 5 - a $325 million issue of 11¼% notes due 2017, which came at 91.445 to yield 13%, and a companion $275 million tranche of floating-rate notes due 2014 which priced at 92 with an initial coupon of 750 basis points over Libor.

But while many other recent deals have moved up from their pricing levels, and some strongly so - especially in the lately active energy sector, where Western rivals Holly Corp. and Tesoro Corp. both brought well received deals around the same time as Western - the latter company's bonds continue to sit dead in the water. The trader quoted the 111/4s in a 91-91¼ context and the floaters right at issue, at 92.

Market indicators move up

Apart from the new deals, a trader saw the CDX Series 12 High Yield index - which rose by ¾ point on Thursday - gaining another 3/8 point Friday to end at 85½ bid, 86 offered. The CDX had finished the previous week, ended June 5, at 84½ bid, 85½ offered

The KDP High Yield Daily Index, which had eased by 6 bps on Thursday, rebounded on Friday, tacking on 18 bps to end at 63.52, while its yield tightened by 4 bps to 10.27%.

In the broader market, advancing issues - which had led decliners for an amazing 18th consecutive session on Thursday - maintained a three-to-two edge again on Wednesday.

Overall market activity, measured by dollar-volume totals, fell by one third versus Thursday's levels.

"It was a pretty quiet day, although credit improved," one trader said, while a second agreed that there was "not too much new and exciting" going on.

Auto parts producers pop up

A trader said that auto parts makers were "going up like a bat out of hell," propelled by a combination of market relief that the sale of most of Chrysler's assets to Fiat had been completed - thus heading off the possibility of the U.S. carmaker's liquidation, a scenario which would have been disastrous for many supplier companies - and the possibility that the parts makers will get loan guarantees and more federal aid under the TARP program.

He said ArvinMeritor's 8 1/8% notes due 2015 rose to 59 bid from 42¾ bid, 43 offered as recently as Tuesday, while the Troy Mich.-based automotive components manufacturer's 8¾% notes due 2012 were at 71 bid, 72 offered, up from 57 bid, 58 offered last week.

And he saw American Axle & Manufacturing Holdings's 7 7/8% notes due 2017 rise to 46¾ bid from 40 on Wednesday.

Another trader saw the Detroit-based vehicle axles, driveshafts and chassis components maker's 5¼% notes due 2014 holding to the levels in the 43-46 area to which they had risen on Thursday, from the mid-30s.

While acknowledging that the Chrysler news likely was a factor in the sector's rise - a sense among investors that they had dodged a bullet, since most analysts had predicted a wave of parts-supplier failures in the event that Chrysler was forced to liquidate or even languish in a lengthy bankruptcy rather than the quick restructuring that took place - he felt that the key driver giving the parts producers a jump-start likely was "the rumors of the TARP money - that the government is going to provide relief."

The two main industry groups for the parts makers, the Original Equipment Suppliers Association and Motor & Equipment Manufacturers Association said earlier in the week that they planned to request the federal aid from the Treasury Department.

Although the Obama administration's auto industry task force had already initiated a $5 billion financing support program in April to keep parts flowing to the stricken GM and Chrysler, industry leaders warned that it was not enough; they said that more loan guarantees, estimated by analysts to perhaps be as much as another $5 billion to $8 billion, would be needed to keep the hard-hit industry afloat in the wake of plant closings by the carmakers and bankruptcies within the parts sector itself, most recently Visteon Corp. and Metaldyne Corp.

Back among the carmakers, a trader saw GM's benchmark 8 3/8% bonds due 2033 better by 2 points at 14 bid, 15 offered - the bonds rising even though an auction to settle the company's credit default swaps set a value on the bonds of 12.5 cents on the dollar.

He also saw Ford Motor Co.'s 7.45% bonds due 2031, which had been rising all week into the upper 60s to near 70, down a point Friday at 67 bid, 69 offered.

Claire's a clear winner

A trader saw Claire's Stores bonds "up 6 or 7 points" in response to the company's fiscal first-quarter financial results, which included a smaller-than expected net loss. "They were a star performer."

He saw its 9¼% notes due 2015 move up to 61½ bid, 62 offered from levels around 55 on Thursday.

Another market source put those bonds at 611/2, a 6½ point rise on the session.

For the fiscal first quarter, which ended May 2, Claire's reported a net loss of $29 million, versus a net loss of $35.6 million in the comparable period last year - even though net sales for the quarter fell to $293.1 million, a 10.4% decrease from $327 million in the 2008 fiscal first quarter.

Claire's also said that its adjusted EBITDA in the fiscal 2009 first quarter improved to $36.3 million from $34.3 million in the fiscal 2008 first quarter.

The first trader meantime said that elsewhere among the retailers, New York-based high-end department

store operator Saks Inc.'s 9 7/8% notes due 2011 rose ½ to 1 point to end at 98½ bid, 99½ offered.

Stephanie N. Rotondo contributed to this report.

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